Tea (chai) is undoubtedly one of the most popular beverages all over the world. After water, it is the only beverage that is a preferred choice of the masses because of a myriad range of healthy and sugar-free forms it can be available in. As a result, a large number of people are starting tea business around the globe are gaining prominence.
Amongst the list of top 5 countries in the world that rank in tea production are China, India, Kenya, Sri Lanka, and Turkey. In fact, in the year 2016, Turkey was the largest tea consuming country in the world, with a per capita consumption of around 6.96 pounds per year, followed by Ireland, United Kingdom, Russia, and Morocco.
Tea is available at varying rates everywhere, with prices ranging from INR 50 per kg to as much as INR 2 Lakh per kg, depending on the existing market rate. If you are amongst the ones looking forward to start a tea business in your chosen location, you can do it in three ways:
- A) Farming
- B) Online Tea Business or Wholesale Business
- C) Café or Tea Shop Business
Let us now discuss these 3 types of tea businesses in detail step by step. However, I would suggest that you go through our article ‘How to Start a Startup’ along with this article, in order to gain more insights about some basic steps like raising the initial capital, series of funding, making business plans, etc.
The first method of doing a tea business is ‘growing your own tea’. For this method, you need to own a land (either rent or purchase) where you can hire farmers who, in turn, can grow different tea blends for you of your choice. Once your land is harvested, you can then take your tea to the market and sell them in bulk to the wholesale market. Let us discuss in detail the steps involved in this kind of business.
Tea begins as a plant named Camellia sinensis. Its seeds are produced in seed baries (orchards) where different farming techniques are employed to produce different varieties of teas that are unique in their taste, color and scent. These techniques also depend on the type of tea whether it is CTC, blended, ginger, green or any other type. One thing to keep in mind is that its plants grow best in hilly regions that are rich in acidic soil and heavy rainfall so choosing land in these regions is a prerequisite. In these areas, step farming is practiced to prevent waterlogging that can stagnate the growth of plants. Its leaves can then be picked by hand or by machines.
2. Adding Manures, Nutrients, and Fertilizers
The right amount of fertilizers and manures need to be added to the soil to constantly replenish the soil that gets devoid of essential nutrients at the time of harvest. A specific annual application of the balanced dose of NPK (Nitrogen, Phosphate, and Potash) is needed to harvest the maximum crop. Mature trees require NPK ratio of 2:1:2 @100 kg/N/ha/ year in spring. Also, 30-40% of sunlight should reach the ground in a diffused manner. The right time of manuring should also be taken into consideration which is ideally the first rain in spring.
Once nutrients and fertilizers are added, it is time to harvest the reap the crop. There are primarily 2 harvests seasons throughout the year, the ‘first flush’ in early spring and the ‘second flush’ in the summer season. Farmers keep the tea plant in the early stage of growth with constant pruning and pick only 2 leaves and a bud from the top of the plants. The stash is then taken to the factory located right on the plantation to allow immediate oxidation after which these leaves are further processed in the form that is available to us.
Ultimately, the tea is then packaged, sealed and ready to be dispatched to the market. You can either sell it on wholesale to a huge market or to different shop owners, depending upon the type and its potential.
B) Online Tea Business or Wholesale Business
The next method exempts a tea businessman from doing his own farming. Instead, he ties up with various tea estates to procure different tea blends depending on the consumers’ preferences, e.g CTC tea or premium ones. The blends are then sold on various platforms like e-commerce players, cafes, shops, wholesale market and to end consumers. One example of this business model is Udyan Tea. Let us go through the steps involved in this type of business:
1. Tie-Ups with Estate Farms
Since you would not have to own a land for farming, establish settlements with different farms to procure the tea leaves grown on their respective farms. This can be across varied geographical locations with different planting techniques employed at each location.
2. Research and Development
Employ an extensive research and development team to make different blends, depending upon the needs of the consumers. Some of the common blends available are CTC (Crushed, Torn apart and curled leaves), black, green, ginger and several others. Usually, the infusion of perfect blends takes months of research and also required a dedicated tasting team to facilitate the process.
3. Branding and Marketing
Depending on whether you are selling to the wholesale market or to shop owners or directly to customers by an online platform, branding strategy needs to be decided. For wholesale distribution, branding can be surpassed as the only minimum form of packaging can suffice. However, for selling to the shop owners and cafes, packaging and branding need to be done to reflect the uniqueness of your brand. You can advertise your product on your website, or on various social media platforms to create awareness. If you are choosing online medium as the main medium then you should invest in Facebook ads and Google ads. These 2 are the biggest players in today’s date for advertisement and for showcasing your brand to a bigger audience.
Once your tea leaves are ready, you can ship your packages from the plantation factory, thereby collaborating with a reliable logistics company. Ultimately, you can sell your packages to a wholesale market, individual shop owners or to various urban cafes who are into serving to end consumers.
But if you are selling via an online medium, you need to take care of the following things:
- The home page of your website should represent what exactly you are doing.
- Showcase your each tea product properly, with its description, price, delivery time, etc.
- Get associated with some good logistic company that can supply your products on time. in the beginning, you can even choose local courier services like First Flight, DTDC, etc.
- Start selling from a small geographical area and attain a respected figure in that area and then move to another city.
C) Café or Tea Shop Business
The last method involving a tea business is to open tea cafes or shop. These cafes usually buy different blends from various tea producers and source them into their cafes. Tea is prepared in house and served to the guests. The focus is also made to provide them with a good ambiance. A lot of cafes have come up over the years like Chai Point, Chaayos, Chai Thela in India, Honest Tea in the USA and David’s Tea in Canada. Let us discuss some steps to start a tea café that can give you some great insights into a successful tea business in India or elsewhere.
1. Choosing a location
Once you have sourced your tea, the next thing to keep in mind is choosing an appropriate location to set up your café or shop. Various factors need to be analyzed in doing this like proximity to the city center and offices, crowded places, purchasing capacity of the people in that region, parking space, visibility, road connectivity, and so on. For standalone cafes or for chains both, rent variables need to be considered too.
After the café location is finalized, the next step is to procure the right kind of machinery into your café space. Keeping in mind your budget and the kind of funding involved, choice of equipment can be made. Procuring freshly brewed tea blends from various plantations also needs to be done. Once the tea is ready, it can be shipped to the café location, or to the café headquarters via a collaborated courier partner.
3. Price Positioning
Finalizing the menu is the next important thing where you need to select the right pricing range of various tea options that are going to be served. Prices also need to be considered for snacks and combos, depending on what is there on the menu. Set price according to the market, make combo offers to increase the bill of each plate.
4. Branding and Marketing
Word of mouth advertising is a viable form of marketing for small cafes while some of them opt for the website and social media promotions as well. Keeping track of consumer feedback in the form of surveys and feedback form also gives the café owners the scope of further improvisations, if needed.
5. Customer Service
Customer service remains at the top of all café experiences and a well-efficient team of servers and tea makers is a must for that. Investing in training programs for the team is another prerequisite that needs to be taken into account. To give an optimum drinking experience to guests, many café owners include different amenities to keep the guests entertained. Creating a small book section for avid readers, soothing music, premium décor are some of the amenities that can uplift the entire drinking experience.